When Shari asked me to write a financial piece for the blog, I had to think, what is the
most important topic to me when I think about personal finance? For the last 10 years I
have been a financial services professional, a career where I get to help many people
daily. I’ve learned that knowing what to do and doing it are two very different things. To
truly accumulate money takes discipline. Sounds easy, maybe, but when you get your
check and you are standing in the store looking at the same item you have been
coveting for weeks and it‘s now on sale, do you buy it or consider your budget instead?
Whatever you choose to spend your money on, the bigger question is, do you have
control over your spending? Or do you arrive at the end of the month wondering where
most of your money went?
When I was younger I was an impulse buyer. I had a lot of money cross my hands at a
young age and discipline was not one of the traits I possessed. Through trial and error I
got better over time. The recession of 2008 taught me the hardest lesson, one I have
NEVER forgotten: If you do not save your money, your money will not be there to
save you when you need it.
I went from making 30-40K a month to maybe 2K a month. It doesn’t take a ton of
imagination to understand what kind of lifestyle change that forces on you. Do you know
how depressing it was to be able to have whatever you wanted and then go to not being
able to afford anything? It’s felt TRAGIC. Plus, I had so much debt to pay because my
level of income changed so drastically. Having to pay back the card limits I was
spending against with a bigger budget forced me to have to settle with every lender and
just start all over with my credit.
I am telling you this story because when it comes to money people tend to feel like their
struggle will last forever. YOU make the choice about how your finances will end up.
You decide if you want to make being broke something permanent or just a pit stop on
your way to financial security while you put you plan into action. Whether you make 30K
a year or 30Mill a year, money management and focus to stay on track with your
ultimate plan is most important. Deciding that you want to grow your money is the first step. Then you create multiple options to grow your money.
Let’s review the basics: First make sure you have a savings account and every time you
get paid, you pay yourself first. Budget every check you get and if you are an
entrepreneur that gets paid at random times, then you still plan your money whenever it
comes. You can create a bank account just to pay bills or designate a credit card that
gives you cash back or offers rewards of your choice. You can then use this card or bank account to pay all your bills. If you use a credit card, make sure to pay in advance what you will be spending on the card. This way you won’t pay interest when it is time to pay the bills so you can reap the card benefits.
Next, you can create a stock account to invest some of your savings in the market to hedge against inflation. Money in your savings account looses buying power because the rate of inflation is higher than the interest in your bank account. Be mindful of this, but know that depending on the industry you are in, having savings is still key because it is easy to access cash.
There are many accounts you can use to start a stock account including TD Ameritrade,
which is one of my favorites, but also there is Stash, Robinhood, which allows you to
start investing with as low as $5. Therefore there are limited excuses on not investing. Sacrifice that Starbucks coffee or dinner out to invest in your financial growth. You put what you can in and let it grow over time. The goal is to have the discipline to allocate an amount or percentage of every check to it and stick with it. These are just a few of my favorite accounts. (Please make sure to do your research on which account is best for you or if having an investment account is a fit for your financial make-up.)
Once you’ve begun to tone your discipline muscle, don’t forget about researching where
to invest your money. Make sure to study Yahoo Finance, Investopedia.com, watch
MSNBC — all great places to learn about the companies in which to invest. When you
invest, always think about the brands you use and the ones you feel are essential in this
world. When you are new to investing one of the key issues is figuring out what to
invest in. Which stocks will work. The thing is we don’t have the crystal ball that tells us,
but knowing about the company you plan to invest in and the factors that affect the type
of business it is can help you on your way.
So now you have your savings and investment accounts. The question to ask yourself
is, what are you saving for retirement? Do you work at a job that offers a pension with a
401(k), 403(b) or 457 ? Have you started your own IRA (Individual Retirement Account)
if you are a business owner and created a SEP (Simplified employee pension), or you
work and you started a traditional or ROTH IRA. Yes, that was an alphabet soup of
acronyms but each one a key to your financial future. Do you have any annuities? Have
you thought about a plan for retirement?
For business owners who may be reading this and say they want to retire before 59 1/2
and that saving for retirement is a waste, try looking at it like this: saving for retirement
means creating financial options for your future. Options are a powerful thing. You’ll
want to discuss your timeline, logistics and planning with a financial professional that
can give you options based on your goals.
Now let’s talk insurance. I call it the glue to your financial portfolio. It keeps everything
still running when you pass away. Some think it’s extraneous. I’ve heard others say they
don’t understand the cost in relation to the value. Let me break it down simply, you do
not want your family to starve when you die because you have not properly set them up
to live after you are gone. I’m not trying to be an alarmist, but for the majority of us, your
income stops when you die. You don’t want your family setting up a GoFundMe for
burial, nor do you want them struggling to maintain what you provided. Did you know
that while you are planning to protect your family with insurance, you can also create a
tax free income for yourself from that same Life Insurance policy. Even better, you can
do it while you’re alive, Yes, you can absolutely have Life Insurance as an asset to you
while you are alive.
Further down this list is disability and long-term care. Are you prepared if you have a
health event in your life that causes you to no longer be able to work or causes you to
be temporarily out of work for six months or more? A health event can make a person
who thought they were financially stable become not only broke, but go deep into debt.
Don’t let that be you. Discuss a disability policy and long-term care insurance policy with
a professional to see how it can benefit you.
I want to make sure I cover protecting and transferring your assets properly. Discuss
setting up a will and health proxy with a lawyer. Also, discuss a trust if you have assets
and if there are multiple people you are transferring your assets to and that you want to
control how and when they get it.
Have financial conversations with your family. We have to learn to be more verbal about
what we want and what we have if we were to die. Your family needs to have a clear
understanding of how you want things, where things are and what you have. Having this
talk while you're still walking the earth, makes it so much easier. Discussing your wishes does not have to be morbid.
My last tip is to make sure you keep all your beneficiaries up-to-date. Your bank
accounts, retirement accounts, Life insurance, investment accounts, etc. Too many
times I have seen families affected with money left to an ex-husband or nothing left to
the youngest kids that were added to the family after planning. Review your finances
annually. Stay focused, keeping your financial target locked and reach for goals at least
monthly. This gives you plenty of opportunity to restart and try to do better the next
month. We all slip. I had to learn the hard way before I buckled down and got disciplined
with my finances. You control accumulating wealth. I’ll be real, it takes saying a few no’s
to things you may want, but all to get to the bigger goal.
You can do it. Start with one thing at a time. A bunch of small efforts aligned with your
goals will help you achieve amazing results overtime.
These are my financial basics to having a wholistic financial plan, but these are not strict
recommendations. Please consult with a financial professional to see what best fits your personal finances. You can also follow me on IG @lindsaysmiththeagent if you would like to more information on building your finances.
Your luv girl,